Canada's largest pure gold play with gold reserves of 11.4 million ounces Feasibility study completed Average annual gold production of approximately 649,000 ounces at cash operating costs of US$437/oz At $850/oz, pre-tax NPV of US$1.03 billion at a 5% discount rate generating an IRR of 14.4%

Overview

The Detour Lake deposit contains an open pit mineral reserve of 11.4 million ounces of gold. The results of the feasibility study indicated that Detour Lake will be capable of producing nearly 650,000 ounces of gold annually over a mine life of 16 years.

The 376 square kilometres Detour Lake property is located on the northern most, relatively under-explored, Abitibi Greenstone Belt in northeastern Ontario. The Detour Lake project is approximately eight kilometres west of the Ontario-Québec border and 180 kilometres northeast of Cochrane, Ontario. Access to the property is available via the Detour Lake mine road, an extension of Highway 652 from Cochrane, as well as by air to the site's 1.6 kilometre gravel airstrip.

The Detour Lake deposit is situated in the area of the former Detour Lake mine, which was operated by Placer Dome and produced 1.8 million ounces of gold from 1983 to 1999. In addition, Detour Gold has a 50% interest in Block A located west of the Detour Lake project, which host an indicated resource of 1.2 million ounces.

Detour Lake project - Location & general geology

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Summary of Feasibility Study

The Company announced the results of its Feasibility study on May 25, 2010, which outlined the production and economic estimates for the development of the Detour Lake project. The project is designed as an open pit operating all year round. The following assumptions and parameters were used:

Assumptions
Gold price (US$/oz) (1)	850
Foreign exchange rate (Cdn$/US$)	1.10
Fuel price WTI ($/barrel)	80
Income/mining tax rate (%)	25/10
Net Smelter Royalty (%)	2
Mine Parameters
Ore milled (Mt)	347.5
Waste mined (Mt)	1,153
Strip ratio (waste:ore)	3.32:1
Average gold grade (g/t)	1.02
Total contained gold (M oz)	11.4
Estimated gold recovery (%)	91.2
Total recovered gold (M oz)	10.4
Mine life (years)	16
Average annual gold production (oz)	649,000
Costs (US$)
Pre-production capital ($ M)	992
Sustaining capital and mine closure ($ M)	626
Average operating cash costs ($/oz)	437
Average total cash costs ($/oz)	454
(1) approximates the 3-year trailing average

Mineral Reserves

The open pit mineral reserves were estimated within a detailed engineered pit design by using the measured and indicated resources at a cut-off grade of 0.5 g/t. The optimized pit shell was generated using the Lerchs-Grossmann (LG) pit optimizer algorithm using the cost and economic parameters estimated by BBA. In the pit design, inter-ramp pit slopes vary from 49 to 56 degrees depending on rock type and structure orientation. The block model was prepared using the Ordinary Kriging (OK) method and the kriged block grades include an estimated dilution of 13.5%. The estimated proven and probable reserves total 11.4 million ounces, after using a 95% mining recovery rate and an additional mining dilution of 3.8%.

Reserve Category	Tonnes (millions)	Grade (g/t Au)	Gold Ounces  (000's)
Proven	81.5	1.28	3,359
Probable	266.0	0.94	8,030
Total (P&P)	347.5	1.02	11,389

3D Pit View

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Mineral Resources

The table below summarizes the global mineral resources estimated by Ordinary Kriging at different cut-off grades.

Resource Category	Cut-off Grade (g/t)	Tonnes (millions)	Grade Capped(2) (g/t Au)	Gold Ounces  (000's)
Measured (M)	0.4	119.8	1.30	5,007
	0.5	108.3	1.39	4,840
	0.6	97.5	1.48	4,650
Indicated (I)	0.4	503.0	0.88	14,286
	0.5	401.8	0.99	12,830
	0.6	323.0	1.10	11,443
Total (M&I)	0.4	622.9	0.96	19,293
	0.5	510.0	1.08	17,670
	0.6	420.5	1.19	16,093
Inferred	0.4	197.0	0.68	4,338
	0.5	133.6	0.80	3,430
	0.6	93.0	0.91	2,716
(1) Mineral reserves are included within the mineral resources reported. (2) Capping grade estimated by domains and varies from 15 g/t to 50 g/t.

The feasibility study database included drilling data from the pre-Detour Gold programs, and Detour Gold's 2007, 2008, and 2009 drilling campaigns. It includes a total of 880,991 metres of drilling in 5,853 holes, including 334,452 metres from Detour Gold.

Mining and Production

The pit design completed by BBA resulted in a mine plan containing 347.5 million tonnes grading 1.02 g/t gold (including low-grade stockpiled ore). Total gold production over a 16 year mine life is estimated to be 10.4 million ounces, averaging 649,000 ounces per year (plus 200,000 ounces of silver). The life of mine waste to ore ratio is estimated at 3.3 to 1.

Summary of the annual mine production plan is outlined below.

Years	Ore Mined (kt)	Ore Milled (kt)	Head Grade (g/t)	Production (oz)	Waste (kt)	Over burden	Strip ratio
PP	4,618		-	-	13,587	15,570	6.31
1	17,672	14,018	1.13	467,537	55,399	10,648	3.74
2	30,065	20,096	1.23	729,822	58,865	10,928	2.32
3	30,528	20,293	1.20	716,687	85,783	10,490	3.15
4	20,046	22,336	0.93	608,160	92,579	10,214	5.13
5	20,007	22,336	0.86	564,444	92,201	8,206	5.02
6	20,064	22,336	0.93	606,810	99,772		4.97
7	20,111	22,336	0.96	628,783	94,105		4.68
8	20,094	22,336	0.88	572,703	100,663		5.01
9	20,162	22,336	0.83	539,601	95,152		4.72
10	20,042	22,336	0.86	560,609	83,686		4.18
11	20,116	22,336	0.92	599,328	72,437		3.60
12	20,093	22,336	1.00	656,036	59,626		2.97
13	20,111	22,336	1.06	692,909	34,269		1.70
14	20,065	22,336	1.09	716,006	24,189		1.21
15	20,142	22,336	1.18	771,320	15,359		0.76
16	20,070	21,561	1.28	812,270	8,433		0.42
17	3,456	3,456	1.39	141,696	661		0.19
Total	347,461	347,461	1.02	10,384,721	1,086,766	66,056	3.32

Conventional open pit mining methods will be used to mine the Detour Lake deposit utilizing a fleet size of up to 36 haul trucks (300 tonne class), 2 electric cable shovels (34 m³), 3 electric-hydraulic shovels (28 m³), 6 drills and various ancillary equipment to support the mining operation. Approximately 28 million tonnes of lower grade ore will be stockpiled during the first three years of operation and be processed throughout the mine life. The open pit design incorporates 10 metre high benches with a 35 metre wide main haul road at a maximum grade of 10%.

Metallurgy, Processing, and Infrastructure

The feasibility study contemplates using a conventional gravity, cyanidation and carbon-in-pulp processing facility initially operating at 55,000 tpd and ramping-up to 61,000 tpd. The assumed availability of the plant is 92% for the first few years and ramping up to 94% in year 4. The grinding circuit consists of two parallel lines, each having one twin pinion semi-autogenous (SAG) mill (36'X20') and one twin pinion ball mill (26'X40.5').These four mills are all equipped with a pair of 7,500 kW variable speed drive motors.

Detour Lake project - Site Plan

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The comminution circuit is designed at 75th percentile ore hardness and is expandable. The crushing capacity is now enhanced from the previous design (pre-feasibility study) with inclusion of a larger gyratory crusher (60"X113" HD equipped with 1,000 kW) and the addition of a secondary crushing circuit (2X750 kW crushers). This system allows for a higher throughput of fine feed (75 mm) to the SAG mill, providing efficiency and stability. In addition, this system is complemented with additional crushing capacity in the pebble crushing circuit. The target grind for years 1 to 3 is set at 95 microns as the tonnage is to be kept at a reduced rate of 55,000 tpd. In year 4, the circuit will be taken to 61,000 tpd by adjusting the grind target to 105 microns and by completing a small expansion of the leach circuit.

Detour Lake project - Plant Site

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The metallurgy of the Detour Lake deposit is simple as the gold is mainly native and easily liberated allowing excellent recovery and for a relatively coarse grind. The gravity circuit is expected to recover approximately 30% to 40% of the gold. The remaining gold in ore is sent to cyanidation followed by carbon in pulp (CIP) gold recovery. After carbon stripping, the gold will be processed through electro-winning cells prior to gold pour. The overall gold recovery is estimated at 91.2% with silver recovery estimated at 48%.

The cyanide solution is recycled to the head of the circuit to reduce operating cost and environmental impact. The remaining stream is detoxified through an SO₂/air system before tailings deposition. The Company will initially use the same location for the tailings impoundment facility as the former operation. The design will be expanded to a second and then a third cell downstream containment system with capacity for approximately 350 million tonnes. The surface facilities include a permanent camp, office building, and other supporting infrastructure.

The Company will construct a 230 kV transmission line for the power usage at the mine site using the expansion of the previous 135 km right of way connection to the power grid at Island Falls and widen the existing 45 km transmission line from Island falls to Pinard Transformer Station. The power consumption for the processing plant is estimated at 31 kW h/tonne.

The plant design criteria were developed by BBA from testwork conducted mainly at SGS Lakefield.

Operating Costs

Operating cash costs over the life of the project are projected to average US$437/oz (after silver credits). Total operating costs (after royalty and silver credits) are anticipated to average US$454/oz.

	US$/t milled	US$/t mined	US$/oz
Average mining costs	6.82	1.58	228
Processing cost	5.21	-	175
General and administration	1.12	-	37
Refining charges	0.03		1
Silver credit	(0.13)	-	(4)
Operating costs (LOM)	13.05	-	437
Royalty (2%)	-	-	17
Total operating costs (LOM)	-	-	454

Capital Costs Estimates (US$ unless otherwise specified)

The feasibility study is based on capital pricing as of the first quarter of 2010. The level of accuracy of the capital costs estimates is within ±15% for feasibility studies.

The pre-production capital costs are estimated at US$992 million and exclude approximately US$83.3 million in 2010 sunk costs that will be funded from existing cash resources. Sustaining capital expenditures over the operation's mine life is estimated at US$580 million, of which nearly 65% is in the first four years (mainly for mining fleet and tailings expansion). Provisions for mine closure funding amount to US$56 million, of which US$10.5 million is included in the pre-production capital.

The Company has entered into commitments for a portion of the long-lead items (SAG and ball mills, gyratory crusher, and drive systems) totalling approximately Cdn$75 million. The mining costs estimate for the truck fleet and mobile equipment is based on pricing received from the tendering process during this quarter.

The cost breakdown for pre-production capital expenditures, assuming an owner operator scenario, is shown below.

	Estimate ±15% (US$ M)
Description	Pre-production Capital	Sustaining Capital
Mining	147	274
Process Plant	398	27
Tailings and Water Management	38	270
Infrastructure and Powerline	133	9
Total direct costs	716	580
Other Indirect	141	-
EPCM	55	-
Contingency (10%)	80	-
Total indirect costs	276	-
Total	992	580
Mine Closure	10	46

Financial Analysis (US$)

The financial analysis for the Base Case (at a gold price of $850/oz), which evaluates an owner's operation, indicates a pre-tax NPV at a 5% discount rate of $1.03 billion with an IRR of 14.4% (unleveraged) and a payback period of 5.9 years. On an after-tax basis, the NPV at a 5% discount rate is $691 million with an IRR of 12.4%. The project is expected to generate $4.1 billion in pre-tax operating cash flow at $850/oz gold price.

The table below outlines key sensitivities for the pre-tax NPV and IRR of the Detour Lake project.

Discount rate	Undiscounted	Base Case 5%	10%
NPV pre-tax(US$ M)	2,479	1,026	325

Gold price (US$/oz)	$700	$850	$1,000	$1,150
NPV pre-tax @ 5% (US$ M)	111	1,026	1,940	2,855
IRR (%)	6.1	14.4	21.8	28.6

Operating cost change	+10%	-	-10%
NPV pre-tax @ 5% (US$ M)	746	1,026	1,305
IRR (%)	12.0	14.4	16.8

Ready to be built

The Company is currently focusing on completing the Environmental Assessment for the project and on community and stakeholder relations, including Aboriginal communities affected by the project. The project will require a number of permits from both the Provincial and Federal governments (click here for more information). Subject to obtaining certain permits and completing Impact Benefit Agreements with the Aboriginal communities, the Company will make the construction decision. According to the current schedule, the Company anticipates starting construction of the mine by late 2010. The main construction period is estimated at 27 months followed by plant commissioning estimated to commence in the first quarter of 2013.

The Company has recognized a number of additional opportunities to improve the project economics:

• 90,000 metres of drilling in 2010 immediately west of the open pit could generate an increase in mineral resources/reserves for year-end 2010;
• Room has been allocated in the infrastructure design to accommodate a third grinding line for potential expansion (i.e. at gold price > $1,000/oz);
• Projected head grade improvement can be achieved with additional gravity leach tests. An initial leach test on 24 drill core composites representing a block of approximately 700,000 tonnes resulted in a head grade of 1.78 g/t Au compared to the fire assay average of 1.68 g/t Au (uncapped) and 0.78 g/t Au (capped). Three other similar leach tests are currently underway. Subject to positive results in all tests, the capping strategy (currently considered to be conservative) will be reviewed for the year-end estimates.
• Dilution work to reduce the current one from 17.3% down to approximately 15%
• Low grade material (0.35-0.5 g/t gold) (equivalent to approximately 1.5 million ounces) could potentially be added to the mineral reserves (i.e. at gold price > US$1,000/oz)

Detour Gold June 2010 Technical Report - (10.2MB)

Detour Gold October 2009 Technical Report - (10.5MB)